Owning one's own home is one of the defining elements of the American dream. But, only a few years ago, this part of the dream seemed to be fading away. This issue brief details the remarkable turnaround in the homeownership rate in the past 6 years. The homeownership rate today is the highest in history. Balancing the Federal budget allowed the Federal Reserve to lower interest rates, creating the most favorable climate for financing a home since the 1960s. Strong economic growth and low unemployment boosted consumer confidence to record levels and encouraged many families to consider homeownership for the first time. HUD reinforced these economic incentives with policy initiatives focused on broadening homeownership. Enforcement of the Community Reinvestment Act and the Home Mortgage Disclosure Act was strengthened. HUD used its oversight of Fannie Mae and Freddie Mac to encourage those entities to reach out to low-income borrowers and areas underserved by the private market. A revitalized FHA has substantially increased lending to African Americans, Hispanics, and other traditionally underserved groups and, in doing so, has worked to increase homeownership opportunities of these segments. Despite the progress that has been made in the overall homeownership, serious gaps remain. Minority, inner-city, and lower income homeownership rates continued to lag behind the rates for non-minority suburban families in 1999.
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